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Introduction

Gross Value Added (GVA) is an indicator of economic output and income generation, measuring the contribution to the economy of each producer, industry or sector and is generally regarded as the best measure of the sum of economic activity within an area. It is an important measure in the estimation of Gross Domestic Product (GDP) when using the "production" or "income" approaches and is now used to determine regional and sub-regional estimates of economic output that were originally termed Gross Domestic Product by the Office for National Statistics. In essence, the link between GVA and GDP can be defined as GVA plus taxes on products, less subsidies on products equals GDP.

Viewed over time, GVA can be used as a conventional measure of economic growth. However, whilst often used as a broad measure of economic and social well-being, the GVA/GDP measures are far from perfect. As well as the "black economy" which escapes the output and income measures of GVA, it also does not include, for example, transfer payments such as social security and pensions, or allowances for household or voluntary work nor aspects like leisure time availability, income inequality or the quality of the environment, all of which are thought to be important factors in determining a nation's well-being.

The Appendix at the end of this article contains supporting material that defines Gross Value Added, details the geographic areas covered and highlights a number of other important issues to consider to help fully understand this important data set.

Total Gross Value Added

The estimated sum of incomes earned from the production of goods and services in the broader 14-authority Lancashire NUTS-2 sub-region in 2007 amounted to just under £22.5bn (Table 1). This sum represented nearly a fifth (19.3%) of the North West Region total or 1.8% of the United Kingdom figure. Within the North West, Lancashire's GVA contribution was higher that that of Cheshire (£21.3bn), Cumbria (£7.4bn) or Merseyside (£19.1bn) but only approaching half that of Greater Manchester (£46.2bn). Within the three Northern regions of England, the Lancashire sub-region's GVA (£22.5bn) was the fourth largest out of the 11 NUTS-2 areas, exceeded by Greater Manchester (£46.2bn), West Yorkshire (£39bn) and Northumberland and Tyne and Wear (£23.6bn).

In absolute terms, the contribution of the Lancashire sub-region to national economic activity in 2007 was the 22nd largest out of the 37 UK NUTS-2 regions in a range that extended from Inner London (£171.6bn) to the Highlands and Islands (£6.6bn). Some £18.6bn, or nearly 83%, of the Lancashire sub-region's GVA was generated within the County of Lancashire with the remainder divided between the two unitary authorities of Blackburn with Darwen with a share of 9.3% and Blackpool with 7.8%.

Gross Value Added per Head of Population

A more useful and comparative measure of economic well-being, and implicitly of general living standards (before allowing for transfer payments), can be made in terms of "GVA per head of population". For the UK as a whole, excluding Extra-Regio, the GVA per head of population in 2007 was £19,951 (see appendices for an explanation of Extra-Regio). There are, however, wide disparities within the UK. Amongst the 37 NUTS-2 sub-regions, Inner London not unexpectedly had the highest level of GVA per head at £57,180 in 2007, more than two and three quarter times the UK average of £19,951. Overall, productivity in Inner London was more than 4.5 times higher than that in the least productive area, West Wales and the Valleys, where the GVA per head was just £12,617.

The strength of the economy of London has a dramatic influence on the overall UK average. Between 2006 and 2007, the GVA per head for the Inner London area grew by 6.8% compared with 4.9% for the UK as a whole and 3.7% in the broader 14-authority Lancashire sub-region. The financial services sector in London had not however felt the full repercussions of the financial crisis and the credit crunch in 2007 and future data for 2008 and 2009 are expected to reflect the impact of the economic downturn and financial crisis on the sector.

Aside from Inner London, other NUTS-2 areas of high value added per head in 2007 together with those at the lower end of the rankings are shown in Table 2.

In the case of the Lancashire 14-authority area, GVA per head in 2007 was estimated at £15,481 (Tables 2 and 3). This level was seven percentage points lower than that of the wider North West Region and only 78% of the United Kingdom average. In these terms, Lancashire is ranked 26th out of the 37 NUTS-2 regions used by the Office for National Statistics and now falls in the lowest third of the rankings (or 12th from bottom), positioned between Northern Ireland in 25th place and East Riding and North Lincolnshire in 27th place.

Change in GVA per Head, 1995 to 2007

Over the period from 1995 to 2007, the North West as a whole has undergone a decline in GVA per head relative to the UK, falling from 90% to 85% of the UK average (Table 3 and Figure 1). In Lancashire, however, the decline has been more dramatic. For the broader Lancashire 14 area, the relative position has declined from 89% of the UK average in 1995 to just 78% in 2007, a fall of 11% in 12 years (Table 3 and Figure 1). For the County Council area, the decline was similar, but to a slightly lesser degree, falling from a figure of 90% to 80% (Tables 2 and 3) – but still a continuous decline.

For both the Blackpool and Blackburn with Darwen unitary authority areas the reductions in GVA per head relative the UK have been more significant. In Blackpool, the GVA per head in 2007 was almost 40% less than the UK average at 62%, falling 13% from 75% in 1995 (Tables 3 and 4), whilst in Blackburn with Darwen, the GVA per head in 2007 was 26% below the UK average (more than a quarter), and 20% percent lower than where it was in 1995.

The local and regional positions have not been helped by the latest revisions to the GVA figures published in December 2009 for the NUTS-1, NUTS-2 and NUTS-3 areas and covering the years 1995 and 2007. Whilst the latest revisions had a positive net impact on GVA at the UK level, the revisions have had a negative net impact on the North West and Lancashire GVA figures. The revisions impact upon the GVA per head figures. Within the region, the negative revisions have generally been greater in scale since 2004 and have resulted in the economic growth rate between the North West and the UK diverging at a greater pace from that date. (Please refer to the Appendices – Notes and Definitions for further analysis of the GVA revisions).

All of the NUTS-3 and NUTS-2 areas in the North West region, with the exception of the Liverpool NUTS-3 area, have experienced a net reduction in their GVA figures as a result of the revisions over the twelve year period. For the Lancashire NUTS-2 area, the latest revisions, together with less than average growth between 2006 and 2007, mean that the GVA per head position relative to the UK – 78% of the national average – is now more inferior than the previous unrevised data would have portrayed for 2007. The revisions have also lowered most of the average real economic growth rates within the region.

Elsewhere in the North West, the Cheshire sub region easily generated the greatest GVA per head of £21,242. This sum was 7% above the UK average, placing the sub-region in sixth position of the 37 UK NUTS-2 areas (Table 2 and Figure 1). The area has seen some erosion of its position since 1995 when GVA per head was 13% above the UK average (Figure 1).

Merseyside generated the lowest GVA per head of £14,155, or only 71% of the national average in 2007 and is fifth bottom of the 37 NUTS-2 areas in the UK. This differential with the UK average has remained fairly constant since 1995, increasing marginally to 72% between 2001 and 2004 before returning to 71% in 2005 (Table 2 and Figure 1).

Cumbria has seen a dramatic decline in GVA per head, falling from 91% of the UK average in 1995 to £14,848, or 74% of the UK average in 2007 (Figure 1) and was seventh bottom, 31st of the 37 NUTS-2 areas in the UK in 2007 (Table 2).

The position of the Greater Manchester area has seen a marginal decline since 2003, falling to 90% by 2007 from 93% in 1995 (Figure 1).

Figure 1 GVA per Head Indices, North West and NUTS-2 Sub-Regions, 1995 to 2007

Source ONS – Headline Gross Value Added per head indices at current basic prices, 1995-2007, published December 2009

GVA per head at the NUTS-3 level (principally individual counties and unitary authorities) revealed even greater variation. In 2007, Inner London West had by far the largest sum with £101,182 (Table 4) followed some way behind by City of Edinburgh with £32,697 and Inner London East with £31,451. At the other extreme, the Isle of Anglesey had the smallest GVA per head of population with just £10,998, followed by the Wirral within the North West region (£11,257) and the Gwent Valleys in Wales (£11,397). Sefton, also within the North West, was 6th from the bottom, ranked in 128th place, with a GVA per head of £12,017.

Ranking the 133 NUTS-3 areas across the UK in 2007 placed the County of Lancashire GVA per head figure of £15,940 in 73rd position, in the lower half of the GVA per head rankings, Blackburn was 89th with £14,800 per head and Blackpool was 123rd (11th from the bottom), some way behind with £12,390 per head. Blackpool's ranking had dropped from 118th in 2006 and Lancashire's had dropped from 68th position in 2006, showing a relative deterioration compared with other areas. Blackburn maintained exactly the same ranking on the previous year.

Aside from Inner London West, other areas of high value added per head in 2007 together with those at the lower end of the rankings are shown in Table 4.

Lancashire Economic Growth (Nominal Current Prices – Unadjusted for Inflation)

On the basis of these GVA estimates which show year on year increases in nominal (cash) terms, Lancashire continued to become a more prosperous place in which to both live and work over the short period between 1995 and 2007. The pace of Lancashire's economic progress relative to many other UK areas was, however, far from sparkling (Table 5). Whilst total GVA in the Lancashire 14-authority sub-region increased by around 62% in nominal (cash) terms over the period, this was well below the average increase in the UK of 90%, and also trailed the regional increase of 71% (see Table 5).

The broader Lancashire sub-region has effectively had one of the slowest economic growth rates between 1995 and 2007 of all the NUTS-2 regions, ranking in just 32nd place out of the 37 areas in the UK. It had the sixth slowest nominal growth rate (61.9%) in the UK, just above North Eastern Scotland (61.8%), West Wales and the Valleys (58.0%), the East Riding and North Lincolnshire (55.3%), Tees Valley and Durham (51.9%) and Cumbria (51.4%), ranked last in 37th position (Table 5). By contrast, the GVA for Inner London, perhaps unsurprisingly, grew by the largest amount, some 138.1% over the same period, whilst the growth in Berkshire, Buckinghamshire and Oxfordshire was 112.3%, ranked in second position. Only 12 of the 37 NUTS-2 areas increased their nominal GVA total by more than the UK less Extra-Regio average of 89.8%, non of which were in the North West region.

At the smaller NUTS-3 level, the County of Lancashire (12-district) area increased its nominal GVA by 66.4% over the 12 year period, again below the UK average of 89.8% (Table 5). The GVA for Blackburn with Darwen increased by 44.2%, marginally below the Blackpool figure of 42.2%. The poor growth rates within the two unitary authorities relative to the Lancashire County figure impact upon the broader Lancashire 14 results, reducing the overall average in both nominal and real terms over the period (Table 5 and Figure 3). Within the North West Region, only the Greater Manchester South area, with a nominal growth rate of 91.4%, grew by more than the UK average of 89.8%.

The growth in nominal GVA for Blackpool and Blackburn with Darwen areas between 1995 and 2007 were the 6th and 7th lowest, respectively, out of the 133 NUTS-3 areas in the UK. Blackburn's position had slipped from 8th bottom in 2006 and Blackpool's from 9th bottom position in 2006. West Cumbria's growth was the 3rd lowest, recording just 37.2% over the period (Table 5 and Figure 2).

Over the last year from 2006 to 2007, the nominal growth rates of the NUTS-3 areas within the Lancashire sub-region, and of the Lancashire 14 sub-region itself, ranging between 3.5% and 3.9%, have been lower than the UK less Extra-Regio average of 5.6%. They have also been lower than most of the other areas in the North West. The Extra-Regio GVA total fell between 2006 and 2007 by -0.4%, most likely reflecting a drop in output from off shore oil and gas production, and/or the value of that production (see Table 5).

As a result of the relatively poor growth in the GVA total within the broader Lancashire 14 sub-region, a weaker than average growth was also reflected in the sub-region in terms of GVA per head, increasing by just 57.8% between 1995 and 2007, the sixth lowest increase of the 37 NUTS-2 areas (Tables 6 and Figure 1). The position had fallen from seventh lowest in 2006. The UK less Extra-Regio GVA per head figure grew by 80.6% over the same period. The lower growth in GVA and GVA per head at the broader Lancashire area has resulted in the deterioration relative to the UK position (Tables, 5, 6, 2, 3 and Figure 1).

Cumbria's GVA per head grew by the 2nd lowest amount, just 48.3%, placing it in 36th position in terms of growth over the period. At the top end of the GVA per head growth rates, in 1st position was the Inner London area that grew by 108.6%. Of the 37 NUTS-2 areas, thirteen increased by more than UK less Extra-Regio average of 80.6%. Merseyside from the North West Region increased its GVA per head by just marginally below the UK average (80.5%), although the increase was from an already low starting point (Tables 6 and 2, and Figure 1).

The weaker than average growth in total GVA at the Lancashire County Council area level (66.4%) was reflected in GVA per head figures which grew by 60.3% between 1995 and 2007. The Blackburn with Darwen GVA per head growth at 42.8% was the sixth lowest of the 133 NUTS-3 areas in the UK, whilst growth in Blackpool, at 49.3%, was 17th from the bottom, or 117th position (down from 112th in 2006). West Cumbria's GVA per head growth was the 2nd lowest in the UK at 37.9%.

Only four of the thirteen NUTS-3 areas from the North West region showed growth in GVA per head equal to or more than the UK less Extra-Regio average of 80.6%. These were the Liverpool area, which grew by 96%; Greater Manchester South with 89.4%; East Merseyside that saw growth of 82.6%; and Halton and Warrington, which matched the UK average growth of 80.6%; (Table 6 and Figure 2).

Again, between 2006 and 2007, growth in GVA per head in the Lancashire 12 and 14-authority areas was below the UK less Extra-Regio average growth of 4.9% and lower than most of the other areas within the North West.

The actual GVA per head figures for each area should also be referred to when comparing growth figures.

Figure 2 Headline Gross Value Added per Head (£000s), 2007, and Growth in Gross Value Added (%), 1995 to 2007, for North West NUTS-3 Areas

Source ONS – Local Gross Value Added 1995 to 2007, published December 2009

Lancashire Economic Growth (Real – Adjusted for Inflation), 1995 to 2007

Lancashire (14-Authority) NUTS-2 Sub-Region

Discounting the effects of national inflation, it is estimated that the total GVA for the broader 14-authority Lancashire (NUTS-2) area grew in real terms by about 20% between 1995 and 2007 compared to 41.1% for the UK as a whole – for the Lancashire 14 area this represents an annual average real rate of growth of around 1.5% (Lancashire County Council NUTS-3 area = 1.8%) compared against 2.9% in the UK at large and 2.0% in the North West Region (Figure 3 and Table 7).

The longer-term implication implied by the differential growth rate is quite substantial. At a steady growth rate of 1.5% per annum, it would take the economy of the Lancashire 14 sub-region just under 47 years to double in size. The doubling time for a 2.9% annual rate of increase, as witnessed in the UK as a whole, is just over 24 years (Table 7).

Figure 3 Change in Real Gross Value Added, 1995 to 2007

Headline Gross Value Added data, deflated using UK GDP Deflators at market prices, rebased to 2007 constant prices

Source ONS – Local Gross Value Added 1995-2007, published December 2009; ONS – GDP (Expenditure) at Market Prices – Year Deflators, updated 25th November 2009

Lancashire County Council (12-District) NUTS-3 Area

The real average growth rate for the Lancashire County Council 12-district (NUTS-3) area between 1995 and 2007 was 1.8% (Table 7). The growth estimates for the county council area have lagged behind the UK rates for all but one of the years (2001) over the period. The area did however record higher levels of real economic growth than the North West average for all but one of the years between 1998 and 2004, narrowing the gap that existed in the early part of the period (Figure 3). Since 2005, the gap has begun to widen once again as the North West has recorded higher real growth rates.

Taking a shorter period, beginning in 1997 until 2007, the annual growth rate showed an improvement, increasing by 2.0% per year on average over this shorter time span (Table 7 and Figure 3).

Note: The real GVA figures produced in this section of the report at the regional NUTS-1 level and below are very much best available estimates and should be used only as a guide to local GVA change over time rather than viewed as the official real local GVA change over time. Please refer to the Appendices – Notes and Definitions section at the end of this report for an explanation of the caveats and the caution that should be employed when reading this section.

Blackburn with Darwen Area

Total real GVA growth in Blackburn with Darwen was 6.8% between 1995 and 2007 (Table 7). This equates to an average annual real economic growth rate of 0.6%, approximately a fifth of the UK rate (2.9%) and a third of the rate experienced in Lancashire County (1.8%). Economic activity actually fell in the Blackburn with Darwen area until 1999 and real GVA did not show an increase until the year 2000. This dip in output can be seen in the graph in Figure 3. Again, taking the shorter time period, between 1997 and 2007, the area has shown an improvement in real GVA growth per year, increasing by 0.9% per annum on average. The better out-turn of the economy in the shorter period also explains the figures in Table 7, where growth in real GVA is greater over the shorter period (9.0%) than the longer period (6.8%), which included a period of economic contraction in the earlier years (Figure 3).

Blackpool Area

After discounting the effects of inflation, the estimate of total real GVA growth of 5.4% for the Blackpool area between 1995 and 2007 is below that of Blackburn with Darwen. This equates to an annual average real rate of growth of 0.4%, roughly a seventh of the UK rate (2.9%) and less than a quarter of the Lancashire County rate of growth (1.8%). The Blackpool economy also experienced a period of contraction between 2001 and 2005 and was stagnant between 1995 and 1996. This is again evident in the graph in Figure 3. In the shorter period between 1997 and 2007, Blackpool's economy grew by 4.8% in real terms, or 0.7% in terms of an annual average real rate of growth. The increase in the real annual rate of growth, despite the contraction in output in the later period, is explained by the total growth being divided by a fewer number of years and one of the omitted years, 1995 to 1996 being stagnant, which did not contribute any growth over the longer 1995 to 2007 period (Figure 3).

GVA by Industry Group

In interpreting these figures, it should be stressed that where an area relies heavily on output and employment on a particular sector or industry, its GVA is particularly sensitive to changes in the profitability of and employment in that industry. In Lancashire's case the importance of manufacturing generally and of the defence/aerospace industry in particular, has impacted disproportionately on local GVA figures for many years. Lancashire continues to have a high dependence on manufacturing (still accounting for 22% of the Lancashire 14 area's GVA in 2007 compared with 13% in the UK (see Figure 4 and Table 8).

In addition to the manufacturing sector, there are other sectors where Lancashire has a percentage share that is greater than the UK average, but none are of the same level of significance. The three service sectors of Public Administration, Education and Health and Social Work are together probably the next most significant and form 21.7% of the GVA Share in Lancashire against 18.3% for the UK as a whole in 2007 (see Figure 4 and Table 8).

The Financial intermediation and Real estate, renting and business activities sectors have spearheaded much growth across the UK, but together only contributed 20.4% of the Lancashire 14 area's GVA in 2007 against around 33% nationally (Figure 4). It is therefore, an area of the economy where the county is not strong.

Figure 4 GVA by Broad Industry Group (%), Lancashire (14-authority area) and the UK, 2007

Source ONS – Local Gross Value Added 1995-2007, published December 2009

Appendices – Notes and Definitions

1. Definition of Gross Value Added
2. GVA by Place of Work
3. Geographies Used in Measuring Local GVA
4. GVA Figures (Moving Averages and Current Prices)
5. Revisions to Previously Published GVA Figures
6. Extra-Regio Gross Value Added
7. Use of Real GVA Figures below the National Level
8. Measuring Regional Economic Performance

1. Definition of Gross Value Added

GVA is the difference between the value of goods and services produced (output) and the cost of raw materials and other inputs which are used up in the production (intermediate consumption), i.e. the value added by any unit engaged in production. This is calculated gross of any deductions for depreciation or consumption of fixed capital. GVA plus taxes on products, less subsidies on products = GDP.

Source Regional Accounts Methodology Guide – Office for National Statistics

2. GVA by Place of Work

A further consideration is that local sub-regional estimates measure GVA on a workplace basis. This means that income from the employment of commuters is allocated to the area in which they work rather than where they live. (In 2001 the Census of population recorded a net outflow of commuters from Lancashire to other work centres of 21,400.) Often a better guide to prosperity at the sub-regional level is provided by estimates of gross disposable household incomes.

Other variables to take into account when analysing or comparing the GVA or GVA per head of geographic areas are the industrial make-up of the area, the employment rate, full and part-time working, population change (a dramatic increase can reduce GVA/head), and the age structure of the area. An area with a higher proportion of dependants, such as children or pensioners, will tend to depress the GVA per head figure.

3. Geographies Used in Measuring Local GVA

The most recent official (and provisional) local estimates of GVA are for 2007 and are geographically based on European-defined statistical units – the so-called "Nomenclature of Units for Territorial Statistics" (NUTS).

In the case of Lancashire for example, the 'local area', the County of Lancashire (a NUTS-3 level area), together with the two unitary authorities of Blackburn with Darwen (also a NUTS-3 area) and Blackpool (again a NUTS-3 area) comprise a higher and geographically larger sub-region known as a NUTS-2 area (Lancashire NUTS-2). NUTS-1 geographies represent the 12 regions of the United Kingdom. The North West of England is a NUTS-1 region for example, as are the North East, Wales, Scotland and Northern Ireland (please note however, that Northern Ireland is classified as both a NUTS1 and a NUTS2 level region).

A full listing of the 12 NUTS-1, 37 NUTS-2 and 133 NUTS-3 level geographies used in this Research Monitor and associated maps can be found in Annex A (NUTS Regions) of the Office for National Statistics Regional Accounts Methodology Guide.

4. GVA Figures (Moving Averages and Current Prices)

The GVA figures provided for each area are (unless otherwise stated) "headline" figures – that is to say, they have been calculated using a five-year moving average based trend of the unadjusted estimates for each region. The estimates are also (unless stated) at nominal current basic prices and do not allow for changes in prices over time (inflation) or differences in regional price levels (purchasing power).

Results for all parts of the UK may be obtained directly from the National Statistics website.

5. Revisions to Previously Published GVA Figures

The GVA figures published in December 2009 contained revised regional and local area data covering the whole period between 1995 and 2007. There were no revisions at the UK level for 2003 or earlier, but the total UK GVA figures for 2004, 2005 and 2006 were revised upwards by between +0.1% and +0.3% of the figures originally published in December 2008. The UK revision for 2006 was +£3,909m, or 0.3% of the 2006 figure published a year earlier in December 2008.

In contrast to the UK, the revisions for the North West region GVA were negative for 1995, 1996, and for the years 2003 to 2006 – and positive between 1997 and 2002. The negative revisions for 2005 and 2006 were however quite marked at -£700m and -£1,626m, representing -0.7% and -1.5% of the GVA data originally published in December 2008. The net revisions for the North West amounted to -£2,326m over the 12 year time span.

All NUTS-3 and NUTS-2 areas in the North West region, with the exception of the Liverpool NUTS-3 area, have experienced a net reduction in their GVA figures as a result of the revisions over the twelve year period. For the broader Lancashire 14 (NUTS-2) sub-region, the latest revisions, together with less than average growth between 2006 and 2007, mean that the GVA per head position relative to the UK – 78% of the national average – is now more inferior than the previous unrevised data would have portrayed for 2007.

With the exception of the Cumbria NUTS areas and the Liverpool NUTS-3 area, decreases to the GVA estimates have generally happened in the most recent 3 or 4 years to 2006 and have been more significant in the most recent 2 years. For the Lancashire 14 (NUTS-2) sub-region, the latest revisions to the 2004, 2005 and 2006 data amounted to -£51m (-0.3%), -£110m (-0.5%) and -£309m (-1.5%), respectively, of the previously reported figures. The revisions for the Lancashire County NUTS-3 area were -£47m (-0.3%), -£90m (-0.5%), -£275m (-1.5%), for 2004, 2005 and 2006, respectively. In the Blackpool NUTS-3 area, the revisions were +£2m (+0.1%), -£15m (-0.9%) and -£32m (-1.8%), respectively, for 2004, 2005 and 2006 – whilst the revisions for the Blackburn NUTS-3 area were less marked totalling -£6m (-0.3%) in 2004, -£4m (-0.2%) for 2005, and -£12m (-0.6%) in 2006.

6. Extra-Regio Gross Value Added

In addition to Northern Ireland, Scotland, Wales and the nine Government Office Regions of England, there is a 13th 'region' known as Extra-Regio, which accounts for economic activity (compensation of employees and gross operating surplus) that cannot be assigned to any specific region. For the UK this activity consists mainly of offshore oil and gas extraction from the continental shelf and the activities of UK embassies and forces overseas. Total UK Gross Value Added includes the Extra-Regio GVA. Alternatively, UK GVA can be expressed without the Extra-Regio value (UK GVA less Extra-Regio). This sum is useful when comparing GVA per head at the regional level and below. In 2007, the Extra-Regio GVA contribution to the total UK GVA was £29,217 million, or 2.3% of the total.

7. Use of Real GVA Figures below the National Level

There are a number of important caveats and cautionary notes that should be taken into account when reading the above section of the report.

Real GDP/GVA figures are produced by stripping out the effect of price inflation (or deflation) on economic activity, so that the actual change in economic output can be measured.

At the present time, official constant price (real) regional GVA data at the NUTS-1 regional level and below (NUTS-2 and NUTS-3) do not exist as they are not produced by the Office for National Statistics. The real GVA growth rates produced within this research monitor have therefore been produced using a national deflator dataset, which have been applied to NUTS-1, NUTS-2 and NUTS-3 data for the North West region. Readers should be aware of the following important caveats when using the figures produced in this section of the report. These are summarised as follows:

1. The deflator series used to strip out price inflation from the GVA at current prices is much broader than other more commonly known price indices, such as the Consumer Price Index (CPI) and the Retail Prices Index (RPI), as it reflects the prices of all domestically produced goods and services, such as investment goods, in the economy.
2. Local GDP/GVA inflation is likely to deviate from the UK average to varying degrees, owing to differences in the composition of local economies and the goods and services produced in those economies.
3. The real GVA figures produced in this report at the NUTS-1 level and below are very much best available estimates and should be used only as a guide to local GVA change over time rather than viewed as the official real local GVA change over time.

8. Measuring Regional Economic Performance

For those interested in reading further about measuring regional economic performance, an article that appeared in the Economic and Labour Market Review in January 2009, Volume 3, Number 1 edition may be of interest.

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